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Risk-taking for others under accountability

Author

Listed:
  • Pahlke, Julius
  • Strasser, Sebastian
  • Vieider, Ferdinand M.

Abstract

We let subjects take risky decisions that affect themselves and a passive recipient. Adding a requirement to justify their choices significantly reduces loss aversion. This indicates that such an accountability mechanism may be effective at debiasing loss aversion in agency relations.

Suggested Citation

  • Pahlke, Julius & Strasser, Sebastian & Vieider, Ferdinand M., 2012. "Risk-taking for others under accountability," Economics Letters, Elsevier, vol. 114(1), pages 102-105.
  • Handle: RePEc:eee:ecolet:v:114:y:2012:i:1:p:102-105 DOI: 10.1016/j.econlet.2011.09.037
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    References listed on IDEAS

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    1. Sutter, Matthias, 2007. "Are teams prone to myopic loss aversion? An experimental study on individual versus team investment behavior," Economics Letters, Elsevier, vol. 97(2), pages 128-132, November.
    2. Charness, Gary & Jackson, Matthew O., 2009. "The role of responsibility in strategic risk-taking," Journal of Economic Behavior & Organization, Elsevier, vol. 69(3), pages 241-247, March.
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    5. Adam Booij & Bernard Praag & Gijs Kuilen, 2010. "A parametric analysis of prospect theory’s functionals for the general population," Theory and Decision, Springer, pages 115-148.
    6. Gary E. Bolton & Axel Ockenfels, 2010. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States: Comment," American Economic Review, American Economic Association, vol. 100(1), pages 628-633, March.
    7. Gerlinde Fellner & Matthias Sutter, 2009. "Causes, Consequences, and Cures of Myopic Loss Aversion - An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 119(537), pages 900-916, April.
    8. Kobberling, Veronika & Wakker, Peter P., 2005. "An index of loss aversion," Journal of Economic Theory, Elsevier, vol. 122(1), pages 119-131, May.
    9. Kristoffer W. Eriksen & Ola Kvaløy, 2010. "Myopic Investment Management," Review of Finance, European Finance Association, vol. 14(3), pages 521-542.
    10. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, March.
    11. Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
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    Citations

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    Cited by:

    1. Mathieu Lefebvre & Ferdinand Vieider, 2013. "Reining in excessive risk-taking by executives: the effect of accountability," Theory and Decision, Springer, vol. 75(4), pages 497-517, October.
    2. Kristoffer W. Eriksen & Ola Kvaløy & Miguel Luzuriaga, 2017. "Risk-taking on Behalf of Others," CESifo Working Paper Series 6378, CESifo Group Munich.
    3. Tim Friehe & Hannah Schildberg-Hörisch, 2014. "Crime and Self-Control Revisited: Disentangling the Effect of Self-Control on Risk and Social Preferences," CESifo Working Paper Series 4747, CESifo Group Munich.
    4. Bixter, Michael T. & Luhmann, Christian C., 2014. "Shared losses reduce sensitivity to risk: A laboratory study of moral hazard," Journal of Economic Psychology, Elsevier, vol. 42(C), pages 63-73.
    5. M. Vittoria Levati & Stefan Napel & Ivan Soraperra, 2017. "Collective Choices Under Ambiguity," Group Decision and Negotiation, Springer, vol. 26(1), pages 133-149, January.
    6. Füllbrunn, Sascha & Luhan, Wolfgang J., 2015. "Am I my Peer's Keeper? Social Responsibility in Financial Decision Making," Ruhr Economic Papers 551, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Ferdinand M. Vieider & Clara Villegas-Palacio & Peter Martinsson & Milagros Mejía, 2016. "Risk Taking For Oneself And Others: A Structural Model Approach," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 879-894, April.
    8. Pollmann, Monique M.H. & Potters, Jan & Trautmann, Stefan T., 2014. "Risk taking by agents: The role of ex-ante and ex-post accountability," Economics Letters, Elsevier, vol. 123(3), pages 387-390.
    9. repec:zbw:rwirep:0551 is not listed on IDEAS
    10. Friehe, Tim & Schildberg-Hörisch, Hannah, 2017. "Self-control and crime revisited: Disentangling the effect of self-control on risk taking and antisocial behavior," International Review of Law and Economics, Elsevier, vol. 49(C), pages 23-32.
    11. repec:kap:jrisku:v:54:y:2017:i:1:d:10.1007_s11166-017-9252-4 is not listed on IDEAS
    12. repec:eee:jeborg:v:136:y:2017:i:c:p:15-28 is not listed on IDEAS
    13. Sascha Füllbrunn & Wolfgang J. Luhan, 2015. "Am I my Peer‘s Keeper? Social Responsibility in Financial Decision Making," Ruhr Economic Papers 0551, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    14. Julius Pahlke & Sebastian Strasser & Ferdinand Vieider, 2015. "Responsibility effects in decision making under risk," Journal of Risk and Uncertainty, Springer, vol. 51(2), pages 125-146, October.
    15. Natalia Montinari & Michela Rancan, 2013. "Social preferences under risk : the role of social distance," RSCAS Working Papers 2013/90, European University Institute.

    More about this item

    Keywords

    Risk attitude; Prospect theory; Responsibility; Accountability; Loss aversion;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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